The appointment of Steven W. Pasko as the chief executive of
VentureHighway.com represents the changing of the guard in
entrepreneurial finance. Pasko has spent a 20-year career with some
of the leading firms in finance, including powerhouse Deutsche Banc
Alex. Brown, a high-tech worldwide investment bank.

Now Pasko has gone digital at VentureHighway.com, where
entrepreneurs looking for capital can meet with angel investors,
corporations and traditional venture capitalists looking for deals.
"Historically," says Pasko, "one of the great
challenges of raising capital privately was inefficiency. There was
no way to get the word out that you had a deal. An
entrepreneur's ability to raise the money was tied to his or
her ability to network."

With the Internet explosion, all that's changed.
VentureHighway.com, for instance, has some 1,500 accredited
investors entrepreneurs can reach through a simple registration
process and a small processing fee. Once a deal is posted on the
site, investors can access a summary of the company, and if
they're interested, authorize VentureHighway.com to release
contact details to the entrepreneur. En-trepreneurs get warm leads
via e-mail without ever taking their eyes off running their
companies.

Pasko admits, however, that the more things change, the more
they stay the same. "You can find investors more easily these
days," he says, "but the time-honored tradition of
closing a deal by pitching the investors live and in person
remains." He adds that entrepreneurs who have mastered this
skill are still the winners when it comes to raising money, while
those who have a fear of flying may be forced to run their
companies a little leaner.

Below, Pasko points out the most common presentation gaffes that
stand between entrepreneurs and the capital they need to grow their
businesses:

Poor timing.
"Entrepreneurs generally say too much or too little.
Unfortunately, either extreme can kill a deal," says Pasko. If
you bore your investors to tears, your presentation is far too long
and indicates to the savvy investor that you are unsophisticated
when it comes to the rules of engagement. It also tells your
audience you have doubts as to what information is critical and
what is simply fluff. On the other hand, you'll give investors
the impression that you're unwilling to share important
information if your presentation doesn't go on long enough. You
want your presentation to last about 20 minutes-unless, of course,
your company is sure to be the next Microsoft, in which case you
can tack on an extra five minutes.

Live demonstrations.
These are almost always failures, particularly for technology-based
products that rely on a PC, a laptop or a network. Murphy's Law
has a funny way of creeping into investor presentations. And if
your demonstration does go wrong when you're pitching your
deal, it may kill your prospects for raising capital on the
spot.

You should save live demonstrations for a later date. "If
an investor made some investment of time and formed some sort of
emotional tie to the company, no matter how slight, he or she is
more likely to overcome a momentary twitch in the technology,"
says Pasko.

Your best bet is to use videotape for perfect demonstrations
every time.

Suspect numbers.
It's not uncommon for entrepreneurs to sport a set of financial
statements which, on further examination, actually indicate a loss.
Aggressive revenue-recognition policies, unrealistic reserves for
returns or bad debts, the presence of deferred expenses or
overzealous capitalization of expenditures can turn apparent
profits into losses. Don't think you can slip these numbers by
investors. Says Pasko, "When the slides start showing
outlandish numbers, investors start leaving the room."

Technology
overexplanation. What many entrepreneurs forget,
especially those who are also scientists or engineers, is that
technical details of companies' products or services are
important only inasmuch as they deliver competitive advantages,
open new markets or change the balance of power in an existing
market. To the average investor, technology in and of itself just
isn't that important-or exciting. "If you focus on mips
and bips, you'll lose your audience," says Pasko.
"And once you lose investors' attention, it can be hard to
get it back." It almost goes without saying that if you
can't get investors' interest back, you'll never get
them to reach for their checkbooks. Spend no more than three to
five minutes discussing technology. Any more time spent on science
is less time devoted to selling the deal.

Poor attitude. You
can't afford to make the mistake of confusing equity investors
with bankers. While bankers might tolerate fractious borrowers-if
they can pay back a loan, hey, they can pay back a loan-equity
investors are more akin to partners. And partners want to have
their say, not be ignored. "An engaging, congenial
entrepreneur will be far more successful than one who is perceived
to be rude, condescending or unhelpful," points out Pasko.
After all, you can draw more flies with honey than you can with
vinegar.

Poor response to
questions. "The question-and-answer session is
generally the most important part of the presentation," says
Pasko. The truth is, in the same way you can train a monkey to do
just about anything, you can train an entrepreneur to make
pitches.

Of course, investors know this, so they rely on the Q&A
portion of presentations to take full measure of entrepreneurs. How
quick are they on their feet? Can they dance? Are they engaging,
and can they sell? After all, the equity investor's payday only
comes if the company gets sold to another company or goes public.
And the only way either of those events will occur is if the
entrepreneurs have sales skills.

A common mistake during the Q&A period is to act like
questions are stupid. The fact of the matter is, despite what your
teacher told you, many questions are stupid-but it's
certainly not in your best interest to tell an investor so.
"Respond to every question as if it's reasonable,"
counsels Pasko. "That way you won't alienate anyone in the
room."

Answers full of techno mumbo jumbo also cause problems.
"They make you look like you're trying to hide
something," says Pasko.

Raising Money 101 says: When you get a question from the
audience, repeat the question; for example, "The gentleman in
the front has asked whether or not our processes are patentable; is
that right?" Also, after answering the question, focus on the
investor again and say, "Does that answer your
question?"

Inappropriate audiovisual
support. "Unless you have a tremendous speaking
presence, and are able to catch and hold an audience's
attention for better than a quarter of an hour, it's generally
a very bad idea to have no visual support," says Pasko. With
so much information pumped into such a small time slot, investors
who get distracted can lose the context of the speaker's
remarks; therefore, it's important to have a visual
outline.

A presentation, accompanied by about 10 to 15 slides, overheads
or handouts that emphasize the speaker's key points and give
listeners a constant frame of reference, tends to be the most
effective. Be careful not to overdo it, and try to tell the story
on the slides. Think of the slides as billboards that carry just
the key messages (see "Next Step").

As for video presentations, "Running a corporate video
[such as the kind shown to new employees] for more than five
minutes can be a negative because it gives investors the impression
that management is trying to hide something, or, worse yet, has no
clue what to say," according to Pasko.

Inappropriate follow-up.
The old adage is yes comes fast, and no takes forever. While this
is typically true when raising capital, there are those in the
investment community who will test the mettle of business owners by
seeing how long it takes them to follow up. If there is no attempt
to make contact after the presentation, even out of courtesy, many
investors get turned off. A common rule of thumb is to follow up
three times, and if there's no response, mentally write the
investor off.
Unless the investor cancels a check on you, never let on that
you're frustrated they didn't bite. The truth is, raising
money can take a long, long time, and problems that turned
investors off during the first go-around can work themselves out
during the fund-raising process: products become fully developed,
sales go up, management is more fleshed-out. "Keep in touch
with the contacts you made early on because at some point they may
become fertile ground for raising capital," Pasko counsels.
"You may just find that you have to deliver your 20-minute
pitch to them once again."

David R. Evanson's newest book about raising capital is
called Where to Go When the Bank Says No: Alternatives for
Financing Your Business(Bloomberg Press). Call (800)
233-4830 for ordering information. Art Beroff, a principal of
Beroff Associates in Howard Beach, New York, helps companies raise
capital and go public and is a member of the National Advisory
Committee for the SBA.

Next Step

The old saying about slide presentations is that they're
never finished; entrepreneurs simply run out of time. Nothing could
be more true. The amount of time spent dithering over slide
presentations is almost incalculable and rarely productive. The
reality of raising money is that the slides don't sell the
deal. The persuasive and compelling manner in which the
presentation is made sells the deal.

Slide presentations are a necessary evil, but keep in mind the
following pointers the next time you go out to meet with
investors:

Think billboards, not
books. Slides should be sparse, not crowded. Remember,
they're only there to keep the audience on track.

Go easy. In most
cases, one slide per minute, or 20 slides for a typical
presentation, is about the maximum you should try to squeeze in.
Optimum: 10 to 15.

Make handouts from your
slides. Some public-speaking pros say never put anything
into the hands of the audience that will distract them from the
speaker-a notion not without merit. However, most hard-core
investors will ask for handouts and often use them to take notes,
so it's better to be prepared than to be caught
empty-handed.